In this column called “The Indicator”, we will be taking an economic or financial statistic from East Africa and breaking it down into bite-sized nuggets of knowledge for investors.

Parents around the world are consistent in their desire for
better lives for their children and for most parents that means giving their
children a good education.

In today’s Indicator we will cover the number 4.6, the average number of years of formal schooling for adults in the East African Community countries.

What do you mean by average
years of schooling?

As per UNESCO’s definition, the Mean Years of Schooling metric
provides the average number of years of education completed by a country’s
adult population aged 25 years and older (excluding years spent repeating
grades). In terms of classifications of educational levels attained, primary
education is from 0 to 7 years of schooling, secondary is 7 years to 12 years,
and tertiary is 12 years and up. The measured average of 4.6 years of schooling
in East Africa means that most East Africans are unable to complete their
primary education.

We are limited by the data available and have used the most
recently available figures. In some cases these numbers are estimates or
extrapolations based upon available data.

Which EAC country has
the most and which the fewest years of schooling?

Kenya, the largest economy in the region, also has the most years of education attained averaging at 6.3 years, followed by Uganda at 5.4 years.

Tanzania is not far behind Uganda with 5.1 years of
schooling attained. Rwanda has 3.3 and Burundi has 2.7 years of schooling per
adult.

How does the EAC compare
to other regions of the world in average years of schooling?

It should not be a surprise to most readers who live in the region that EAC countries are near the bottom of the table globally when it comes to educational attainment.

The world leader in average years of schooling is a tie
between the US and Germany with 12.9 average years of schooling.

These two book-smart countries are followed not surprisingly
by other countries high on the Human Development Index table including
Australia at 12.8 years, Norway at 12.6 years, and New Zealand and Israel both
with 12.5 average years of schooling for their respective populations.

In Asia, the studious South Korea is the leader with 11.8 years
followed by Japan at 11.5 years of schooling per adult.

On the African continent, South Africa is the leader with
9.9 years of schooling and in the Sub-Saharan region Gabon is the next highest
at 7.4 years of schooling.

Adults in other leading regions are able to attain more than
8.0 years over their European, North American, or Australasian counterparts and
nearly double the EAC’s neighbors to the south.

Is this number increasing
or decreasing in the EAC?

Despite the low base, the numbers are improving with over
145% growth in number of years of schooling since 1980 though slowing down in
recent years with only 8% growth in the past decade.

How does this affect the economies of East Africa?

More education brings higher rates of literacy and other
formal skills to the workforce. The more educated the workforce is, the higher the
ability of workers to do a variety of jobs. In this case, we would expect to
see an expansion of workers and innovation in the industrial, services, and
technology sectors. Usually, jobs in these sectors bring in higher wages and
overall prosperity to communities. Reduced educational levels compared with the
rest of the world are limiting economic growth in EAC countries.

The esteemed scholar Confucius is credited as saying, “If
your plan is for one year plant rice. If your plan is for ten years plant
trees. If your plan is for one hundred years educate children.”

What is being done to increase the education levels in EAC
countries?

Educational levels
in EAC countries are low due to a number of factors.

One reason is that
after water, food, and other essentials to sustain basic life for a family, gathering
money for education for children is unfortunately out of reach for many EAC
citizens. School fees are high relative to other costs because of the high
costs required to effectively educate children.

Each government has
made strides to increase access to education in their respective
countries.

Tanzania has
recently announced free education for all primary schools; however, ancillary
fees for uniforms, books, and school supplies can add up to a prohibitive
amount of funds required for everyday citizens.

The EAC itself is in
the final phase of an Educational Harmonization plan, which will have every
country’s educational policies and procedures aligning. This phase is projected
to end in the next two years.
Harmonization of policies and procedures offers abilities to find efficiencies
and gain economies of scale in regional efforts and investments.

Development partners
and NGOs are very active in the sector and region though quite varied in their
approaches, missions, and efforts.

For example, UNESCO
has been supporting the expansion of the scope of education by pushing for
literacy tests, pastoralist education, vocational programs, and educational
programs for out-of-school mothers and the introduction of innovative education
policies throughout various locales in EAC countries.

What are the opportunities created to solve these
challenges?

Where there are challenges or deficits oftentimes there are
business and investment opportunities. The following is a brief summary of a
few market opportunities and investment ideas that could fill the gap where
educational services have been lacking for students of all ages:

Private low-cost schools – Bridge International Academies
describes itself as “the world’s largest education innovation company
serving the 700 million families who live on less than US $2 per
day”. The for-profit social
enterprise company serves one hundred thousand students including in Kenya and
Uganda with technology enabled solutions, mobile phones, tablets, and Learning
Labs.

Another example of a social enterprise
focused on youth education is Kidogo, which focuses on low cost early childhood
(years 0-5) child care and education through hubs in Kenya’s urban
centers.

Educational entertainment and enrichment: Ubongo
is an edutainment company that creates interactive applications for tablets,
phones, and other screens focused on primary and kindergarten level students to
make learning more accessible and enjoyable for kids.

Another example of using phone and tablet-based
education outside of the classroom is Eneza Education which started in Kenya
and is expanding to Tanzania. Costs for
national curriculum content delivered by SMS is currently priced at less than US
$0.10 per week.

Educational competitions: The EAC Students Essay Writing Competition is
an annual competition where students can compete and demonstrate their writing
skills. The competition is intended to help students from EAC countries to get
to know each other and the EAC as an institution better, and to help rising
stars shine.

Corporate sponsored training: In addition to on-the-job training for
employees global corporations are seeking to enhance skills through targeted
training sessions. One such event is Africa Code Week, a corporate sponsored week-long
program throughout schools across the continent to encourage learning in
information and communication technologies by both students and teachers.

Vocational, apprenticeship and intern programs: Significant opportunities to develop and transform
unskilled workers into productive technicians is likely to emerge in the
upcoming years. One such program is the US
$62 million African Development Bank loan to Kenya’s Support to Technical and Vocational
Education and Training. This program targets future technicians, artisans and
workers in various industries.

This is but a small list of several potential and emerging
types of investments into the EAC education industry to respond to the demand
for knowledge and development amongst students.

We can hope that the investment and venture communities will work to solve this increasing problem for the benefit of the rapidly growing youth population of the EAC.

David L. Ross is Managing Director of Statera
Capital and US Ambassador to the Open University of Tanzania active in growing
companies in Eastern and Southern Africa through primary investment, investment
advisory, strategic partnerships, and executive education. Connect on LinkedIn
at http://tz.linkedin.com/in/davidlross1 or at [email protected]

The Exchange is a financial journal published by Mediapix Limited, a public relations, news and communications organization with its African headquarters in Tanzania and sister operations in Canada, the United States and The United Arab Emirates. The company‘s founders have been instrumental in the media and communication industry in East Africa and have been operational in the region.